Foreign investors yet to take root

09:24 | 27/11/2012
Although the Red River Delta is an attractive venue for drawing foreign investors in livestock sector, there appears to be an urgent need for better incentives to lure more overseas capital, as VIR’s Thanh Thu reports.

In early October 2012, US’ Cargill Vietnam’s ninth Vietnam-based animal feed mill in northern Ha Nam province officially came into operation, with and total investment capital of $18 million and the capability of producing 240,000 tonnes of feed per year.

This is the company’s second animal feed mill in the country’s Red River Delta. The first one located in neighbouring Hung Yen province started operating in 2004 and it now has an annual capacity of 120,000 tonnes. It is expected that the combined capacity of these two mills will reach 400,000 tonnes by 2015.

In mid-October 2012, Cargill Vietnam also put its $4 million aqua feed production line into operation at the Hung Yen mill, raising the number of the company’s total aqua feed production lines in Vietnam to four and the total aqua feed capacity to 200,000 tonnes per year. At present, the company’s total feed capacity is around   one million tonnes, which will be raised to 1.5 million tonnes by 2015.

According to the Ministry of Agriculture and Rural Development’s (MARD) Livestock Production Department, available raw material and labour sources, geographical advantages and attractive investment incentives were the major reasons for Cargill Vietnam and many other foreign investors in livestock production  to select Vietnam’s Red River Delta.

Like Cargill, Thai-backed animal feed maker CP Vietnam has also planned to put into operation of a $50 million feed mill in the Red River Delta’s Hai Duong province in early 2013. This 60,000-tonne-per-month mill, which has been under construction since 2011, will supply pig and poultry feed to northern provinces.

In May 2012, CP Vietnam also put into operation a $17 million poultry processing factory, said to be the most modern one of its kind in Vietnam, in Hanoi’s Phu Nghia Industrial Park.

Meanwhile, the Australian-Vietnamese joint venture animal feed-maker Austfeed Vietnam is building a 10 hectare nucleus pig farm in Hung Yen to develop genetics exclusively for the local pig industry.

“We will import the best genetics from around the world to develop the pig breeds that is suitable for local conditions, farming environment and preferences of consumers in Vietnam,” said Austfeed’s chief executive officer Dao Manh Luong.

Also in Hung Yen, Austfeed has planned to establish a research and development centre for meat processing in 2013. Being the first facility of this kind in Vietnam, the centre will be equipped with laboratory scale equipment imported from Germany.

China’s largest aqua feed producer, Tongwei Group, also did not want to miss investment in the Red River Delta. In September 2012, Tongwei inaugurated its third feed mill in Hai Duong with the construction cost of $10 million. This three hectare plant has an annual capacity of 200,000 tonnes.

The Livestock Production Department cited reports by 27 cities and provinces nationwide as stating that during 2000-2010, the Red River Delta had five foreign invested livestock projects. But these projects’ investment capital totaled $261.9 million, representing 94.4 per cent of total investment capital of 68 foreign invested livestock projects in Vietnam during this period - a reflection of the region’s potential for livestock investment projects.

Nguyen Thi Hong, vice head of MARD’s Planning Department, said economic difficulties were shrinking agricultural investments into the country, from 8 per cent of Vietnam’s total foreign direct investment in the 1990s to 2 per cent in 2011 and about 1 per cent this year.

“Thus, each region must have their own attractive incentives to lure investors,” Hong said.
The Vietnamese government in June 2010 promulgated Decree 61/2010/ND-CP on coaxing investment into agricultural and rural development, under which there are many special incentives for investors.

“However, foreign investors remain reluctant to inject cash into this sector because agricultural projects have big risks about raw materials, low profits and natural calamities. In another case, some provinces seem not like such projects as they do not bring so much profit as other projects do,” said Dang Kim Son, head of the MARD’s Institute for Policy of Agriculture and Rural Development.

For instance, local media cited Tran Xuan Dung, a representative from South Korea’s animal feed maker Sunjin Vina, as saying this company wanted to build a feed mill in Ha Nam. However, this province did not want to develop more projects of the type. “The provincial authorities said tax from livestock projects is little, so land will be used for other projects,” Dung said.

Meanwhile, Nguyen Van Nga, a representative from Indonesia’s livestock developer Japfa Comfeed Vietnam, said his company wanted to boost investment in the country, but epidemics, environmental pollution and natural calamities were a big concern.

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